Thiel: Mariners again good — at making money

13 years into the playoff drought, Mariners bosses finally deliver on what was needed: Buying the players the franchise was unable to grow.

Finally, the urge to win has been felt by the Mariners’ bosses. / Wiki Commons

For a franchise historically used to delivering bad news by the boxcar, the Mariners in 2015 are bringing in good news by the freighter. For those steeped in the traditions of Seattle baseball — typically, two outs and nobody on — it’s disconcerting.

It’s like swapping out the old Philco black and white TV in a cabinet for a Samsung curved 65-inch, Smart 4K SUHD LED TV. You know it’s cool, but it’s easier to accept if you’re 12 years old and don’t know history.

And I’m referring today not about the game on the field, but mostly the game in the bank.

In March the Mariners reported to the state’s Public Facilities District that operates the stadium a cash profit for 2014 of $11.6 million. The figure is merely a keyhole-sized look at the club’s books, but the number suggests that the Mariners are long past the pretense of financial struggle.

That profit was based in part on Safeco attendance of 2.06 million, a nice bump from 2013′s 1.76 million, but smaller than four seasons in the Kingdome and nowhere near the club’s Safeco peak of 3.54 million in 2002.

Then came the Forbes story last week that in the magazine’s annual valuation of MLB franchises, the Mariners were worth $1.1 billion, a 55 percent increase from the previous year’s estimate. Not a bad return on the $100 million purchase from Jeff Smulyan in 1992.

Then we learned this week that the Mariners have increased the 2015 player payroll to $120 million, according to an Associated Press survey of MLB clubs. Last year, they began the season at $92 million.

Add up these benchmark financials and it creates a picture of prosperity — annual operating profits, rapidly increasing appreciation in equity, healthy player payroll — for a team that has not made the playoffs in 13 years.

Imagine if they had won a little.

With the arrival in the playoffs last fall after a brutal, 29-season absence, the Kansas City Royals eagerly let the Mariners leap over them on the list of teams with longest postseason droughts. The new leader in the craphouse is Toronto, Seattle’s expansion sister, at 21 seasons. The Mariners are No. 2, two ahead of the Miami Marlins.

For all the praise heaped upon the 12s for their forehead-vein-popping support of the Seahawks, and for all the wows globally that accompany news of the nightly 40,000 at Sounders games, perhaps even more amazing feat in this sports marketplace is that the region’s fan base did not totally quit on the Mariners.

To put up with 13 years of ineptitude and blunder despite favorable economic and geographic advantages accruing to a monopoly operation, Mariners fans deserve some sort of award for industrial-strength passion over logic.

Well, at least half of them do — the low of 1.72 million in 2012 is about a 50 percent scare-off since ’02. The numbers certainly could have been lower. The Adam Jones trade alone should have sent thousands to their tornado cellars for life.

But many remained. Now they grow, thanks in part to Jack Zduriencik and/or others who convinced CEO Howard Lincoln that standard business practices do not apply in MLB. Lincoln approved the extension of Felix Hernandez’s contract and the signing of Robinson Cano in amounts that directly contradict everything he learned in business life about reality.

Those two maneuvers, combined with the purchase of their regional sports network, Root, set the Mariners on the same nut-job track as most of the successful teams in MLB. Because there is no proven template for successful team-building in baseball, and because there is no salary cap, random acts of seemingly reckless spending can bring championships more times than they don’t.

Even when the plan fails, and no matter how hard the industry tries to alienate with its various scandals and controversies, it cannot discourage the hard-core baseball fan. That is the salvation of the game.

If each of the 1.5 million hard-cores brings one sane person to every game, the gate reaches three million. Throw in the much bigger TV revenue, and the formula is nearly idiot-proof.

Enough time has passed since the 1995 Mariners season to have an entire generation come of age without bearing witness to the year’s feats. As a witness to the events then, and the Seahawks successes of 2013-14, I can say with certainty that the raging emotional burn of an unexpected pennant race was the equal of anything the Seahawks produced, and probably greater, because of baseball’s dailyness.

At least football gives several days between games to unclench the jaw.

Now, in 2015, the Mariners owners and bosses, finally, fully embracing the business nonsense of baseball, are preparing to return to relevance, and reap the reward.

A starting lineup has been assembled containing a handful of stars with everyone else more or less around the major league average. The rotation and bullpen are among the best. The manager who proclaimed “a golden age” was upon Seattle baseball with his hire, and who is only now healing from the scoff marks, no longer is seen as a whack job, but as a formidable leader.

It is the best Mariners team since the 2001 version won 116 games. To top all, no other American League team looks extraordinary.

But looks often deceive, no guarantees are made in April, and no W’s are given for wallet size.

To draw another Kansas City reference, the Royals last season finished with 89 wins, two games ahead of Seattle and nine games behind the Los Angeles Angels, who had the best record in MLB. In their playoff series, the Royals ($92M payroll) beat the Angels ($156M) 3-0, and went on to the World Series.

Stuff happens. But to get the chance to win it all, a team has to get to October. If a team like Seattle can’t grow enough players to be major league average or better, it has to buy those players. In Robinson Cano and Nelson Cruz, they bought those players.

Ownership always could buy premier players in their expensive prime. Finally, ownership did. Finally, comes the award for those fans with industrial-strength passion over logic: A World Series.

YourThoughts

RadioGuy

The thing is, Art, none of this is truly surprising. Baseball has been about making money ever since 1876, when Bill Hulbert convinced a group of like-minded individuals that they could turn a profit from the game if they just took control of it away from the players. The money is waaaay bigger now, but the motivation remains unchanged.

art thiel

That has always been generally true, but I was around in 1991, 1995 and 1996 when the Mariners were put up for sale by two ownerships over claims that baseball wasn’t working in Seattle economically. That’s why we have Safeco Field. Whether you believe the crisis was real, a lot of people put forward money who DID believe.

RadioGuy

No argument with the latter part of your post, but the vast majority of people who buy major league sports franchises do so with the idea of making money from them. Some do have a sense of noblesse oblige. I think Yamauchi-san was one of them, the Force 10 ladies who own the Storm are in that group and even Howard Schultz wanted to do right by Seattle (to a degree), but there are more George Argyros and Ken Behring types in the owners’ boxes. Sadly.

art thiel

I don’t believe I said there was something wrong with making money, but until the deal for Safeco was struck, the Mariners were under perpetual threat of kidnapping for not making ENOUGH money. Which wasn’t true. Then when Safeco allowed them to make buckets of money, they squandered it.

RadioGuy

Sorry if it seemed I was implying that you have a problem with the profit margin. I’m pretty sure you don’t.

There were cash flow limitations with the Kingdome, but I don’t believe the team was losing money. The thing about sports teams is that if their owners show a loss on paper, they can write them off against taxes on their more profitable businesses. Argyros was a master at this before selling to Smulyan for 500% over what he paid Kaye-Smith for the team a few years earlier. Until then, the M’s were subsidizing his SoCal real estate biz (shopping centers?).

In a Machiavellian sense, Argyros may have been the most successful owner the M’s have ever had in terms of dollars and cents, but not so much for managers, players and fans.

ReebHerb

Enjoyed a couple of spring games. Mariners and Cubs were sold out in Mesa so paid $60 for a $35 face value ticket for a seat in the shade. The next day paid $27.50 for a Peoria ticket in the shade. Two star motels in Phenix are over $200 if they have vacancies. I paid $90 for a sketchy dive.

Radio is a great easy baseball listen. I’ll enjoy the Mariners this season from speakers. Plan on seeing the Rainer’s a couple times. Love those small parks.

art thiel

Good for you Reeb. You don’t have to be rich to enjoy baseball.

coug73

Yes, M’s like Wisconsin Brie all these years, now we got the good stuff. French Brie Triple Cream. We going to get wine with this cheese?

art thiel

Golden Age Cellars merlot, 2015. McClendon ssys it goes well with ice cream.

coug73

This Golden Age Cellars Merlot sounds like a flyer, you never know until you pop the cork and swirl and sip. Ice cream he screams, we all want a championship in baseball.

jafabian

The fans that stick around are the baseball purists and ones who hope that ’95 will come back around again. Just think how much money the organization will make if they won the World Series?

art thiel

Not sure who a purist might be, but that was then and this is now. And the Mariners are a good team.

Da Kid

Dewd, are you now saying “Patience is for winners?” Or just for big spenders?

Its onlySports(DavidWakefield)

On paper the 2001 squad should have breezed into the World Series.That is a parallel to be drawn with this seasons squad.On paper the 2015 version seemingly holds advantage.Just missing the play offs should make them a hungry bunch that needs to smell blood.If it parlays to that extra 6~7 wins it might take to return to the play offs then great.Its tough chasing dreams after that Historic 2001 season.Felix Hernandez deserves that it comes to pass. I hope they find their sharks mentality and close in.

Trygvesture

I’m hatin the spammer. Let us know who whose email we can flood to get them to police and filter the spam! You guys deserve better than the hack hosting site you’ve got right now.

JimC

I love, love the Philco namecheck, Art. Dear old Dad used to work there, many years ago.

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Kirsten Kendrick's Q. & A. with Thiel can be heard every Friday during Morning Edition at 5:35am and 7:35am and again that same day on All Things Considered at 4:45pm. It also airs Saturday at 6:35am and 9:35am.